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What is a bank?

A bank is a place where people put their money (deposit) to keep it safe. A bank is a business like a grocery store or a restaurant. The business needs to make enough money to pay the people who work there and the cost of things like electricity, paper, and even paper clips.

In order for a bank to stay open, it needs to get a lot of people to put their money in it. People put their money in the bank because the bank pays interest. Interest is extra money the bank gives you to keep your money there. This means that you earn money on every dollar you put into the bank.

Let’s say that you put $1.00 in your savings account in the bank. The bank will loan your dollar (along with lots of other people’s dollars) to people who want to buy a house, car, boat, or start a new business and don’t have enough money to do it on their own. When those people start to pay the money back, they PAY interest that is higher than what you will EARN on your dollar. Let’s say they pay the bank $1.10 for every dollar they borrowed. When this comes to the bank, they use five cents of the interest on every dollar to pay their employees as well as for office supplies, etc. That leaves your dollar plus five cents ($1.05). The bank puts that five cents into your account and loans out your dollar again. They do this over and over so money goes in and goes out of the bank every day. This flow of money makes it possible for you to withdraw (take out) money when you need it.

What is a Savings Account?

Savings accounts are a good way to save money. Savings accounts are meant to be used to save money, not spend it. You can save for something special or for emergencies or things you need when something unexpected happens. For example: Let’s imagine that Jessica doesn’t have a savings account. She finds out that her favorite singer is having a concert. She needs ticket money but all the money she has is in her piggy bank, but it’s not enough money to buy a ticket. If she had saved her money, she would have had the money she needed for the concert.

Some people think it is much easier to save their money in a piggy bank or in a box under their beds. This is not as good as a savings account because it is too easy to spend. Having $10.00 in a box under your bed when your friend says, “Let’s go get ice cream,” is probably not the best savings plan. It is too easy to get ice cream and promise yourself that you will replace the money. Somehow it never gets replaced.

How do I open a Savings Account?

Most of the time, a savings account is your first bank account. Take your parent to the bank with you, because he/she might have to sign up for the account with you. Find out what your Social Security Number is from your parents because this is a number that is used to set up bank accounts. When you get to the bank, there are usually people standing at high desks with little window areas. They are called tellers. People who start accounts usually sit at desks with customer chairs in front of them. Account managers have started plenty of savings accounts and will help you through the steps to becoming a good saver.

You sign up for the account and then give the bank employee the money you want to deposit. You will get a monthly statement showing all of the deposits and withdrawals.

How can a kid make money?

There are lots of different ways you can make money, even if you’re too young to get a job. The best way to make money is to work for it.

• Search under the cushions of chairs and couches for loose change. This may or may not work!
• Ask for cash gifts instead of presents.
• Have a yard sale.
• Do jobs for your friends and neighbors: pull weeds, mow the lawn, help clean, walk their dogs, wash their cars
  
• Take care of your neighbors’ pets when they go on vacation
  
• Do chores around the house.
  
• Ask your parents for an allowance.
  
• Baby-sit
  
• Make crafts and sell them to your neighbors.

For other ideas on how to make money, look for the book Kid Biz—Year Round Money Making Projects for Junior Entrepreneurs.